The Modern Slavery Act [1] was an important first step toward combatting modern slavery in Australia. Five years after its introduction, the Act has contributed to raising the awareness of modern slavery in company supply chains. Despite this, an independent Review published last year found that it has not made significant inroads in combatting the root causes of modern slavery [2].
The Review offered 30 recommendations to strengthen the Act, and subsequent modern slavery reporting. These recommendations include introducing penalties for non-compliance and mandating companies to demonstrate a due diligence system to identify and remediate modern slavery risks in their supply chains [3].
As Australia’s largest superannuation fund [4], AustralianSuper invests across a variety of asset classes, industries and geographies, including in Australian real estate.
AustralianSuper believes that increased transparency on modern slavery and labour risks in the value chain helps investors to assess company business models, risk strategies, and the effectiveness of actions to prevent, mitigate and address risks.
CAF supports risk management for property investors
In addition to being a large investor in property, AustralianSuper also has more than 100,000 members in the cleaning industry [5] – the largest membership of cleaners in Australia. The cleaning industry has been identified as being at high risk of modern slavery due to several factors including the reliance on, often vulnerable, migrant workers and subcontracting practices, resulting in limited transparency in cleaning supply chains.
AustralianSuper seeks to address and mitigate material investment risks in the cleaning supply chains of the properties it may invest in, to protect investment value and member outcomes in the long-term.
Concerned about exploitative practices in the cleaning industry and the impact it has on their members, AustralianSuper co-founded the Cleaning Accountability Framework (CAF) with the United Workers Union (UWU) in 2012. CAF operates a Certification framework that addresses modern slavery risk by working with entities at the top of the supply chain to undertake due diligence in the procurement, management, and delivery of cleaning services while identifying and remediating labour rights violations.
Recognised as an anti-slavery mechanism by leading business and human rights experts, CAF certifies commercial real estate assets via their 3 Star Standard [6]. This set of labour standards seeks to ensure that cleaning staff are compensated according to law and that appropriate labour practices are upheld. As a cross-sector collaborative effort, CAF increases transparency and stakeholder accountability through the adoption of good labour practices, including superannuation obligations.
This systemic change positively impacts more than 1,700 cleaners who work at CAF-certified buildings. To AustralianSuper, and similar-minded investors in the Australian property market, CAF Certification indicates that properties are operating ethically concerning their labour practices, helping mitigate modern slavery risks and protecting investment value and members’ outcomes in the long-term.
Empowering workers: CAF’s worker-driven due diligence
CAF’s approach puts workers at the heart of its Certification scheme. This model is based on Worker-Driven Social Responsibility (WSR), a concept gaining global traction as best-practice in the Human Rights Due Diligence space [7]. Through holistic education and ongoing engagement with workers, conducted in partnership with UWU, CAF can identify warning signs of modern slavery-like practices, poor labour practices and health and safety concerns. Labour issues can include underpayments, non-payment of superannuation, poor working conditions, non-compliance with record keeping requirements and unethical contract and procurement approaches.
Between 2019 and 2023, CAF identified and investigated 772 compliance issues across the cleaning services supply chains of 40 commercial buildings and retail precincts in Australia. CAF has found that 70% of compliance issues are identified through worker engagement, as compared to only 30% found through desk-based audits [8]. This highlights the effectiveness of engaging workers directly in the certification process.
CAF Representatives, who are cleaners themselves, are nominated by their colleagues to voice issues and ensure they are escalated up the supply chain. CAF Representative and AustralianSuper Member, Jonathan Martin, shares how issues raised by cleaners at his workplace have been remediated through CAF Certification:
“The team was doing the training on our own time and the supplies were running out without replacement. After raising this in the previous Annual Health Check with CAF and the Union, the company has begun compensating staff for training conducted during work hours.”
Similarly, Daniel Uesebio, a CAF Representative and AustralianSuper Member, shared that:
“In regards to pay breaks, staff didn’t know back then our second break was meant to be paid. This resulted in back pay thanks to CAF and the Union, and staff signing up to join the Union and talking about issues they were having.”
“We think it’s important that workers across the board, including cleaners, can access their full entitlements and that superannuation is paid on behalf of cleaners. We try to represent our members in the cleaning industry with the utmost care, ensuring not just their outcomes in retirement, but their day-to-day working life.” – Sandra Silea, AustralianSuper Director of ESG and Stewardship and CAF Board Member
Modern Slavery Act reforms: paving the way for effective risk mitigation
Taking a “risk to people” approach that prioritises engaging workers helps investors to improve their processes for identifying and addressing modern slavery in the supply chains of their investment portfolio.
As a key proponent of this, CAF utilises a worker-driven due diligence approach with demonstrated effectiveness in both identifying modern-slavery-like practices and providing a framework to ensure effective remediation. Engaging workers every step of the way is critical to ensuring labour rights violations are regularly identified and addressed thoroughly to ensure better working outcomes for cleaners.
Strengthened legislative amendments to the Modern Slavery Act will mean that investors, and property companies hoping to attract investors, will need to adopt similarly minded human rights due diligence approaches to uncovering and addressing exploitation in their supply chains.
Disclaimer: This article is sponsored by AustralianSuper. Any general advice provided in this document is provided under the AFSL held by AustralianSuper, it does not take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and refer to the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
Footnotes:
[1] Modern Slavery Act, Australian Government, published 2018.
[2] Review of Australia’s Modern Slavery Act 2018 – Issues Paper, Australian Government, Attorney General’s Department, published 2022.
[3] Report of the statutory review of the Modern Slavery Act 2018 (Cth) The first three years, Australian Government, Attorney General’s Department, published 2023.
[4] Quarterly superannuation fund level statistics (March 2024), Australian Prudential Regulation Authority, published May 2024.
[5] As at 30 June 2024
[6] Cleaning up their Act Report, PIRC, published 2022
[7] Worker-Driven Social Responsibility: A New, Proven Model for Defining, Claiming and Protecting Workers’ Human Rights, Center for Labor and a Just Economy, published 2023
[8] If you aren’t doing Worker Engagement, you’ve got Blind Spots in your Cleaning Supply Chain, Cleaning Accountability Framework, published 2022